Robert J. and Lisa N.

Polk

Tax Return 2014

ACCT 3350.001
Team 2
10/15/2015
(Abuga), Anne
(Do), Ngan
(Hassan), Avin
(Lieu), Ashley

Tax Return Documentation

Information Bases
During the whole process of creating the Polks Tax Return 2014, we based the information that
Robert and Lisa are married and filed their tax return jointly.

1. Robert J. Polk: Income Information

- Yearly salary wage: $200,000 + $75,000 bonus for 2013 received in 2014, which makes a total
yearly wage of $275,000.

2. Robert J. Polk: Employment Related Expenses

-Job related expenses include: Airfare: $5,100, Lodging: $3,300, Meals and Entertainment: $575,
and Local transportation: $750. The total employment related expenses are $9,725
-Roberts speeding ticket of $2,500 is not deductible because it is against public policy.
-MGM reimbursed Robert for $8,000, therefore, only $1,725 were job-related expenses.

3. Lisa N. Polk: Business Expenses

-Deductible: Supplies: $5,000, Legal fees: $7,000, CPA license fee: $1,500, Subscriptions of
professional journals: $6,500, and Dues to professional organizations: $1,250, Purchase of a new
computer for the office for $5,000 making it a total of $26,250.
-Since Lisa does not have a primary place of business, and sometimes does the work at the
clients premises, the expenses incurred for the home office are not deductible.
-The 6,000 miles used for business purposes are deductible by using the standard mileage rate
method to determine the amount. 6,000 x $0.565 = $3,390. This is the amount that is deductible.

4. Lisa N. Polk: House Expenses

-The Ad Valorem taxes on personal residence of ( $10,000) and the interest on home mortgage of
($23,000) are deductible. A home mortgage interest deduction allows Lisa to reduce her taxable
income by the amount of interest she paid on the loan.
-The repairs of roof resulting from storm damage ($ 10,000) and Utilities of ($5000) are not
deductible.

5. The Polks Stock Transactions:

-Pfizer Corp: Gain of $2,350
-Texas Instruments: After the 10% dividend, the Polks receive an extra 50 shares, totaling in 550
shares. $7,810/550 = $14.2 x 300 shares sold = $4,260. So $17,100 - $4,260 is $12,840, resulting
in a gain of $12,840.
-Allergan: Loss of $1,275
-ExxonMobil: Loss of $1,800
-Texaco: Gain of $1,310
-HulaHoop: Gain of $2,975

6. Robert J. Polk: Investments in Groupon Stock

- Roberts basis in the Groupon common stock is $100,000 (5000 shares x $20/share on August
5, 2010). The stocks become worthless on December 2014; it is treated as having been sold on
the last day of the tax year. As a result, Robert realizes a net long term capital loss of $100,000.

7. Polks Receipts for 2014:

- Lisas consulting income of $150,000 is fully taxable. The $7,000 included from payment for
work she did in 2013 is taxable since she is a cash basis taxpayer and the income is realized in
2014. The $15,000 did not include for work performed in 2014 is not taxable since the income is
not yet realized.
- The interest income from the City of Dallas bonds ($12,000) is not taxable since it is interest
from municipal bonds. However, the interest income from Ford Motor Company bonds
($19,000) is taxable.
- Sarah Duvals loan repayment is not taxable.
- The cash gifts of $20,000 from Lisas parents is only taxable for $13,000. The rest of $7,000 is
not deductible.
- The Federal income tax refund from 2013 return ($9,000) is taxable.
- Assuming Lisa operates her business on a cash basis, she can not deduct the $6,000 of Bad debt
from an imprisoned client since it would not have been included in income.

8. Lisa N. Polk: Lake House

Both Lisa and Robert bought a lake house at ($250,000) before it was damaged by fire.The
market fair value of the land after casualty is ($60,000). The cost basis of the damages is ($
180,000). The insurance settled 90% of the actual loss which equivalates to ($162,000) a loss of
($18,000).

9. Polks 2014 Expenditures

- Life insurance premium of $4,000 not deductible.
- Medical and dental expense not covered by insurance, is deducible; $14,000.
- State and local sales taxes of $8,000 is deductible.
- The contribution to the Salvation Army (Tampa Beach) is deductible for $11,000; helping a
family in hard time ($3,000) is not deductible. Stock held for less than one year contributed on
February 1, 2014 to Goodwill Industries is a deduction of $10,000. Stock held for more than one
year given to a charity organized in Canada ($30,000) is deducted.
- The contribution to the Committee to reelect the Bill/Hill President (CREEP) of the U.S.
($10,000) is not deductible.
- Gambling winnings of $8,200 are taxable income, however the loss of $12,000 is not
deductible as amount loss is excess to the amount gain.

10. Polks Personal/Dependency Deductions

- Both Robert and Lisa have personal exemptions with a dependency exemption for Anna Marie,
who is at the age of 17 (qualifying for being under the age 18 and/or full time student at age 24).
Tyler, age 20, does not qualify as a dependent as he is not a full-time student and making his own
income. Total deduction in recording is $12,000 ($4,000 x 3).

11. Roberts Form W-2:

-The $75,000 withheld for Federal income tax is inputted onto the tax return form.
-The Polks four quarterly tax payments of $30,000 each are distributed four times during the
fiscal year.

Suggestions for Tax Return 2014

Due to the high tax return amount for 2014, it is recommended to lower the following for the
2015 return filing: write off investment losses, give more to charity; adjust withholdings.